A radical proposal to reduce congestion on Britain’s road network

Dr Richard Wellings is head of transport at the Institute of Economic Affairs.

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Richard Wellings

ROADS carry 90 per cent of UK passenger traffic and 70 per cent of freight. Their efficiency, therefore, has a major impact on the wider economy, and even in London, where rail is much more important. But recent governments have neglected the road network, with little new investment since the early 1990s. Policy has instead focused on pushing passengers and freight onto the railways.

This anti-roads strategy has been costly – and not just through exploding rail subsidies. The annual cost of traffic congestion is now estimated at £20bn. But the biggest losses come from the failure to build new infrastructure where it is needed. Longer travel times reduce labour mobility and raise the costs of trade. Poor road links translate directly into lower productivity and living standards.

The basic problem is that the road sector is outside the market economy, with the supply of new capacity almost totally divorced from demand. As a result, hundreds of congested towns across the UK are still waiting for a bypass, and several major cities lack good motorway connections.

Fortunately, there is much that can be done quickly to make roads more efficient. The first step is to stop making it even more dysfunctional. Funding for anti-car schemes that reduce capacity or increase delays should be halted. Many bus lanes could be returned to general use, for example. The government should also increase speed limits. Raising the 40 miles per house limit for heavy goods vehicles on single carriageway roads should be the top priority. As well as boosting productivity, this would improve safety by reducing overtaking.

Finally, investment in new infrastructure should be redirected to schemes with the highest economic returns, whether road or rail. An economically rational approach would quickly pay large dividends.

But these measures would not be adequate to tackle congestion in many parts of Britain. Only some form of road pricing can do this in an efficient way. Our recent report, Moving the Road Sector into the Market Economy, suggests introducing voluntary pay-as-you-go pricing schemes at a local level, with participants getting big discounts on motoring taxes. This would test the technology and showcase the ability of charging to reduce congestion by offering cheap off-peak rates. It would also provide incentives for greater private sector involvement in the network. Firms could invest in new capacity in return for a share of toll receipts.

Ideally, ownership of much of the network would eventually be transferred to the private sector, perhaps partly through a stockmarket flotation of the motorways and trunk roads. The proceeds – together with the boost to general revenues from higher efficiency – could be used to reduce or even abolish fuel duty.

In combination with tax cuts, moving the road sector into the market economy has the potential to increase investment and tackle congestion while lowering costs for users. After decades of mismanagement, the network would finally become responsive to the needs of motorists.